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News

St.Petersburg Economic seminar (HSE, EU, PDMI) on March, 12: Yulia Kuchumova (HSE St. Petersburg)

Topic: Tax Debt Collection Enforcement: When Does Suspension of a Driver's License Help?
Date & Time: March, 12; 18:00 - 19:30
Venue: St Petersburg, Fontanka river embankment, 27, PDMI RAS, Marble hall (2nd floor)

Yulia Kuchumova (HSE St. Petersburg) will give a talk on Tax Debt Collection Enforcement: When Does Suspension of a Driver's License Help?
Time:
 18:00 - 19:30
Venue: St Petersburg, Fontanka river embankment, 27, PDMI RAS, Marble hall (2nd floor)

Abstract: This paper examines the enforcement of tax debt collection and explains when it is optimal to impose on delinquent taxpayers a collateral tax sanction such as the suspension of a driver's license or the revocation of a passport. I develop a dynamic model, where individuals are heterogeneous in income and in ability to escape tax debt payment: a debtor may not pay the tax debt either because of being income constrained or because of having a higher chance to escape from the collection process. To discourage tax debt, the tax authority can impose a monetary fine or a collateral tax sanction. I show that, when debtors differ in their ability to escape tax debt, the timing when a penalty affects the tax debtor is critical, therefore it may be optimal to use the collateral tax sanction in addition to the monetary fine. In contrast to the monetary fine that can be delayed and paid only when the tax debt is collected, the collateral tax sanction applies and influences immediately. In the case, when the utility is CRRA and the distributions of income and ability are uniform, it is optimal to use the collateral tax sanction if the upper bound of income distribution is sufficiently large.

 


Calendar: https://tinyurl.com/spbecon
Research seminar webpage: http://scem.spb.hse.ru/en/ilgt/hs